The invention is a method and apparatus and will be described as applied to a cellular or wireless telephone and network of the GSM type. It should be understood however that the invention is not limited to such GSM cellular wireless network nor to telephones, but may find application elsewhere, wherever there is provision of services and/or goods which are paid for with prepaid smart cards.
Smart cards or electronic chip cards are usually the size of a conventional credit card and have six or eight electrical contacts on one face and include inside an integrated circuit with memory and may include a microprocessors. Data and programs for manipulating the data and communicating outside the card are included in the integrated circuit. In the past the prepaid cards have been widely used in the purchase of telephone service, particularly in France and Germany, where public pay telephones accept the cards instead of coins. Typically the cards are purchased at the post office for a specific amount. The cards are inserted in a public pay telephone, connection is made to the contacts and units of value are removed from the card as the telephone call progresses. The mechanical and electrical specifications of the cards is standardized and one set of standards is published by the ANSI (American National Standards Institute), 11 West 42 Street, New York, N.Y. 10036 under the title "Identification cards-Integrated circuit(s) cards with contacts" ISO 7816-1 and ISO 7816-2.
Smart cards have been manufactured and are commercially available from several companies including those of applicant's assignee, GEMPLUS Card International, Avenue du Pic de Bertagne, Parc d'activites de la Plaine de Jouques, 13420 Gemenos, France.
Cellular wireless networks are widely spread across the globe today. These networks are built to one of a few technical standards, which are GSM, DCS 1800, and PCS 1900. The present invention is described with reference to GSM but is not limited to GSM. The standards on wireless networks may be obtained from ANSI. Particularly attention is directed to standard ETSI/GSM 11.11. Those wishing additional information on cellular wireless telephone and operation are referred to a number of books in the field, for example Mouly, Michel and Pautet, Marie-Bernadette, The GSM System of Mobile Communications, 1993, Loissoy-les-Chateaux, France, Europe Media Duplication S.A.; or Clayton, Michael, GSM Global System for Mobile Communications (1992), North Sidney, Australia, Security Domain Pty Limited.
These cellular technologies today have some of the latest techniques. In most cellular wireless networks there is a subscriber identity module, SIM, which is in the handset. It identifies the subscription to the cellular wireless network. In some cellular telephones, the SIM is permanently installed in the telephone; but in more modern equipment it is removable and is mounted in a smart card.
The advantage of a removable SIM mounted in a smart card is that a subscriber may carry his SIM with him and insert it in any cellular telephone which will accept the smart card. This permits him both to use the card and to be billed on his home number.
In order to subscribe, one needs to pass a credit check. As a result, only credit worthy people can get wireless service. The networks do not address the market segment of "credit challenged" people who cannot prove that they are reliable enough to be treated as a regular subscriber.
GSM based networks rely on a subscriber number called an International Mobile Subscriber Identity, IMSI, that is to be attached to an individual. Thus, anonymous subscribers cannot be offered services since they need to be identified first, and then attached to a unique IMSI. In GSM based networks, the IMSI number is stored in the SIM card. When inserted into the handset, the SIM provides to the network information about the subscriber that is necessary for establishing a call and for billing of the call.
Because of this arrangement those potential customers who cannot qualify as subscribers do not get any service. Based on today's analog subscription rate, then 40%-50% of people applying for subscriptions have been denied credit and thus denied service.
Depending on the country and also depending on the distribution method in that country, the problem can get more serious. In Europe, for example, the subscription process occurs at the point of sale. If the credit check at the point of sale is negative, then the user will be refused service without having to purchase any goods. However, in North America an individual can buy a "ready to go" package in many different consumer stores, such as Radio Shack or Wal Mart without having to sign any contract at the time of purchase. The subscription process is done over-the-air later, usually at home. Consequently, the potential user can spend a few hundred dollars, e.g. $200, for a package that he is not guaranteed to get any service from. And, this is a major problem that has not been solved to date.